A rapid and decisive reduction in the rate of growth of the money supply for the purpose of disinflation is called
A)a salt water policy.
B)a cold shower policy.
C)gradualism.
D)a cold turkey policy.

Question

Quizplus · Accepted Answer

A rapid and decisive reduction in the rate of growth of the money supply is often referred to as a "cold turkey" policy because it involves a sudden and drastic change. This is in contrast to a gradualist approach, which involves slowly and steadily reducing the money supply over time. A "cold shower" policy is not a commonly used term in economics. "Salt water policy" refers to a Keynesian approach to macroeconomic management, which prioritizes government intervention to stimulate demand, while "cold turkey" policy focuses on reducing the money supply to combat inflation.

A Rapid and Decisive Reduction in the Rate of Growth